- Second Quarter Revenue Increased 6% on Both a Reported and
Constant Currency Basis, Ahead of Expectations Led by Europe and
Asia
- Global Direct-to-Consumer Comparable Store Sales Grew 10%,
Driven by Positive Retail Comps Across All Regions
- Adjusted Gross and Operating Margin Expansion Exceeded Our
Outlook, with Brand Elevation and Expense Discipline More than
Offsetting Planned Investments in Marketing and Key City
Expansion
- Maintained Healthy Balance Sheet Including $1.7 Billion in Cash
and Short-Term Investments and Well Positioned Inventories Ahead of
Holiday While Mitigating Global Supply Chain Disruptions
- Returned Approximately $375 Million to Shareholders Through Our
Dividend and Repurchase of Class A Common Stock This Fiscal
Year-to-Date
- Raised Full Year Fiscal 2025 Revenue and Adjusted Operating
Margin Expansion Outlook, Reflecting Confidence in Brand Momentum
and Business Trends
Ralph Lauren Corporation (NYSE:RL), a global leader in the
design, marketing, and distribution of luxury lifestyle products,
today reported earnings per diluted share of $2.31, up 5% to prior
year on a reported basis and $2.54, up 21% on an adjusted basis,
excluding restructuring-related and other net charges, for the
second quarter of Fiscal 2025. This compared to earnings per
diluted share of $2.19 on a reported basis and $2.10 on an adjusted
basis, excluding restructuring-related and other net charges for
the second quarter of Fiscal 2024.
"A spirit of optimism and the easy elegance of timeless style --
these are elements that have come to define our brand," said Ralph
Lauren, Executive Chairman and Chief Creative Officer. "This summer
was a celebration of all that we cherish, and as we turn our focus
to holiday, we will continue inspiring people around the world to
come together and step into their dreams."
"Our teams are executing well on our long-term strategy,
injecting energy and excitement behind our storied brand through
what continues to be a choppy global operating environment," said
Patrice Louvet, President and Chief Executive Officer. "Our strong
business performance across every geography this quarter
underscores the resilience of our diversified growth drivers and
our elevated consumer base, giving us confidence to take up our
financial outlook for the full fiscal year ahead of the
all-important holiday season."
Key Achievements in Second Quarter Fiscal 2025
We delivered the following highlights across our Next Great
Chapter: Accelerate priorities in the second quarter of Fiscal
2025:
- Elevate and Energize Our Lifestyle Brand
- Drove continued momentum in new customer acquisition and
loyalty with 1.5 million new consumers in our direct-to-consumer
businesses, increases in brand consideration and net promoter
scores, and more than 62 million social media followers, a low
double-digit increase to last year
- Created powerful, authentic connections with consumers through
key moments, notably: our 2024 Paris Olympics campaign as official
outfitter of Team USA; iconic sponsorships of Wimbledon and the
U.S. Open Tennis Championships; and our Spring 2025 World of Ralph
Lauren fashion show, inspired by the natural beauty and quiet
sophistication of coastal living in the Hamptons
- Drive the Core and Expand for More
- Drove continued momentum in our Core business, up low
double-digits, along with our high-potential categories (Women's
Apparel, Outerwear, and Handbags), which increased mid-teens to
last year in constant currency and outpaced total company
growth
- Product highlights this quarter included: our U.S. Open
capsule, featuring modern sportswear inspired by the tournament's
bold energy and timeless Polo style; "Denim Daydream," the 3rd drop
in our Artist in Residence collaboration with Naiomi Glasses; and
our Pink Pony collection, supporting Ralph Lauren's longstanding
commitment to cancer care and research
- Increased average unit retail ("AUR") by 10% across our
direct-to-consumer network in the second quarter, above
expectations and on top of a 9% increase last year, reflecting
continued mix shift toward our full-price businesses and the
durability of our multi-pronged elevation approach
- Win in Key Cities with Our Consumer Ecosystem
- By geography, revenue growth was led by Asia, up 9% on a
reported basis and 10% in constant currency, exceeding our
expectations with China up low-teens on a reported and constant
currency basis. Europe sales grew 7% on a reported basis and 6% in
constant currency driven by continued brand momentum across the
region. North America inflected to 3% growth as stronger
direct-to-consumer performance more than offset a modest planned
decline in wholesale
- Continued to expand and scale our key city ecosystems with the
opening of 25 new owned and partnered stores in the second quarter.
Key store openings during the period included: Tulsa, Oklahoma;
Giverny, France; and Shenzhen, China
Our business is supported by our fortress foundation, which we
define through our five key enablers, including: our people and
culture, best-in-class digital technology and analytics, superior
operational capabilities, a powerful balance sheet, and leadership
in citizenship and sustainability.
Second Quarter Fiscal 2025 Income Statement Review
Net Revenue. In the second quarter of Fiscal 2025,
revenue increased 6% to $1.7 billion on a reported basis and was
also up 6% in constant currency. Foreign currency favorably
impacted revenue growth by approximately 10 basis points in the
second quarter.
Revenue performance for the Company's reportable segments in the
second quarter compared to the prior year period was as
follows:
- North America Revenue. North America revenue in the second
quarter increased 3% to $739 million. In retail, comparable store
sales in North America increased 6%, with a 9% increase in brick
and mortar stores more than offsetting a 2% decrease in digital
commerce. North America wholesale revenue decreased 3%, in-line
with our outlook.
- Europe Revenue. Europe revenue in the second quarter increased
7% to $566 million on a reported basis and 6% in constant currency.
In retail, comparable store sales in Europe increased 15%,
significantly exceeding our expectations, with a 15% increase in
brick and mortar stores and a 14% increase in digital commerce.
Europe wholesale revenue increased 2% to prior year on a reported
basis and increased slightly on a constant currency basis, with
stronger re-order trends more than offsetting a timing shift of
receipts into the second half of the year.
- Asia Revenue. Asia revenue in the second quarter increased 9%
to $380 million on a reported basis and 10% in constant currency,
ahead of our expectations. Comparable store sales in Asia increased
11%, with a 10% increase in our brick and mortar stores and a 19%
increase in digital commerce.
Gross Profit. Gross profit for the second quarter of
Fiscal 2025 was $1.2 billion and gross margin was 67.0%. Adjusted
gross margin was also 67.0%, 160 basis points above the prior year.
Gross margin expansion was driven by favorable product, channel and
geographic mix shifts, lower cotton costs and AUR growth across all
regions.
Operating Expenses. Operating expenses in the second
quarter of Fiscal 2025 were $977 million on a reported basis. On an
adjusted basis, operating expenses were $958 million, up 7% to last
year. Adjusted operating expense rate was 55.5%, compared to 54.9%
in the prior year period, driven by higher marketing investments
due to the planned timing of key campaigns. Excluding marketing
expenses, adjusted operating expense rate was flat compared to the
prior year period.
Operating Income. Operating income for the second quarter
of Fiscal 2025 was $179 million and operating margin was 10.4% on a
reported basis. On an adjusted basis, operating income was $197
million and operating margin was 11.4%, 90 basis points above the
prior year. Operating income for the Company's reportable segments
in the second quarter compared to the prior year period was as
follows:
- North America Operating Income. North America operating income
in the second quarter was $122 million on both a reported and
adjusted basis. Adjusted North America operating margin was 16.5%,
up 140 basis points to last year.
- Europe Operating Income. Europe operating income in the second
quarter was $146 million on both a reported and adjusted basis.
Adjusted Europe operating margin was 25.8%, up 70 basis points to
last year. Foreign currency negatively impacted adjusted operating
margin rate by 20 basis points in the second quarter.
- Asia Operating Income. Asia operating income in the second
quarter was $86 million on both a reported and adjusted basis.
Adjusted Asia operating margin was 22.7%, up 310 basis points to
last year. Foreign currency negatively impacted adjusted operating
margin rate by 80 basis points in the second quarter.
Net Income and EPS. Net income in the second quarter of
Fiscal 2025 was $148 million, or $2.31 per diluted share on a
reported basis. On an adjusted basis, net income was $162 million,
or $2.54 per diluted share. This compared to net income of $147
million, or $2.19 per diluted share on a reported basis, and net
income of $141 million, or $2.10 per diluted share on an adjusted
basis, for the second quarter of Fiscal 2024.
In the second quarter of Fiscal 2025, the Company had an
effective tax rate of approximately 21% on both a reported and
adjusted basis. This compared to an effective tax rate of
approximately 11% on a reported basis and 18% on an adjusted basis
in the prior year period. The increase was driven primarily by the
absence of favorable discrete tax benefits realized in the prior
year period, more than offsetting a favorable stock compensation
adjustment as compared to prior year.
Balance Sheet and Cash Flow Review
The Company ended the second quarter of Fiscal 2025 with $1.7
billion in cash and short-term investments and $1.1 billion in
total debt, compared to $1.5 billion and $1.1 billion,
respectively, at the end of the second quarter of Fiscal 2024.
Inventory at the end of the second quarter of Fiscal 2025 was
$1.1 billion, down 6% compared to the prior year period, primarily
driven by strategic reductions in North America.
The Company repurchased approximately $100 million of Class A
Common Stock in the second quarter.
Full Year Fiscal 2025 and Third Quarter Outlook
The Company's outlook is based on its best assessment of the
current geopolitical and macroeconomic environment, including
inflationary pressures, other consumer spending-related headwinds,
global supply chain disruptions and foreign currency volatility,
among others. The full year Fiscal 2025 and third quarter guidance
excludes any potential restructuring-related and other net charges
that may be incurred in future periods, as described in the
"Non-U.S. GAAP Financial Measures" section of this press
release.
For Fiscal 2025, the Company now expects constant currency
revenues to increase in a range of approximately 3% to 4%. Based on
current exchange rates, foreign currency is expected to negatively
impact revenues by approximately 40 to 60 basis points in Fiscal
2025.
The Company now expects operating margin for Fiscal 2025 to
expand approximately 110 to 130 basis points in constant currency,
driven by gross margin expansion and operating expense leverage.
Gross margin is expected to increase approximately 80 to 120 basis
points in constant currency. Foreign currency is expected to
negatively impact gross and operating margins by approximately 20
basis points.
For the third quarter, the Company expects constant currency
revenues to grow approximately 3% to 4%. Foreign currency is
expected to benefit revenue growth by approximately 10 to 50 basis
points.
Operating margin for the third quarter is expected to expand
approximately 100 to 140 basis points in constant currency, driven
by gross margin expansion. Foreign currency is expected to have a
roughly neutral impact on gross and operating margins in the third
quarter.
The Company's full year Fiscal 2025 tax rate is now expected to
be in the range of approximately 22% to 23%, increasing from 19% in
the prior year, following discrete tax benefits recognized in the
prior year period. The third quarter tax rate is expected to be
approximately 22%.
The Company expects capital expenditures for Fiscal 2025 of
approximately $250 million to $300 million.
Conference Call
As previously announced, the Company will host a conference call
and live online webcast today, Thursday, November 7, 2024, at 9:00
A.M. Eastern. Listeners may access a live broadcast of the
conference call on the Company investor relations website at
http://investor.ralphlauren.com or by dialing 517-623-4963 or
800-857-5209. To access the conference call, listeners should dial
in by 8:45 A.M. Eastern and request to be connected to the Ralph
Lauren Second Quarter 2025 conference call.
An online archive of the broadcast will be available by
accessing the Company's investor relations website at
http://investor.ralphlauren.com. A telephone replay of the call
will be available from 12:00 P.M. Eastern, Thursday, November 7,
2024 through 6:00 P.M. Eastern, Thursday, November 14, 2024 by
dialing 203-369-3811 or 800-568-3705 and entering passcode
2719.
ABOUT RALPH LAUREN
Ralph Lauren Corporation (NYSE:RL) is a global leader in the
design, marketing and distribution of luxury lifestyle products in
five categories: apparel, footwear & accessories, home,
fragrances, and hospitality. For more than 50 years, Ralph Lauren
has sought to inspire the dream of a better life through
authenticity and timeless style. Its reputation and distinctive
image have been developed across a wide range of products, brands,
distribution channels and international markets. The Company's
brand names — which include Ralph Lauren, Ralph Lauren Collection,
Ralph Lauren Purple Label, Double RL, Polo Ralph Lauren, Lauren
Ralph Lauren, Polo Ralph Lauren Children and Chaps, among others —
constitute one of the world's most widely recognized families of
consumer brands. For more information, go to
https://investor.ralphlauren.com.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release, and oral statements made from time to time
by representatives of the Company, may contain certain
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include, without limitation, statements regarding our
current expectations about the Company's future operating results
and financial condition, the implementation and results of our
strategic plans and initiatives, store openings and closings,
capital expenses, our plans regarding our quarterly cash dividend
and Class A common stock repurchase programs, and our ability to
meet citizenship and sustainability goals. Forward-looking
statements are based on current expectations and are indicated by
words or phrases such as "aim," "anticipate," "outlook,"
"estimate," "ensure," "commit," "expect," "project," "believe,"
"envision," "goal," "target," "can," "will," and similar words or
phrases. These forward-looking statements involve known and unknown
risks, uncertainties, and other factors which may cause actual
results, performance, or achievements to be materially different
from the future results, performance or achievements expressed in
or implied by such forward-looking statements. The factors that
could cause actual results to materially differ include, among
others: the loss of key personnel, including Mr. Ralph Lauren, or
other changes in our executive and senior management team or to our
operating structure, including any potential changes resulting from
the execution of our long-term growth strategy, and our ability to
effectively transfer knowledge and maintain adequate controls and
procedures during periods of transition; the potential impact to
our business resulting from inflationary pressures, including
increases in the costs of raw materials, transportation, wages,
healthcare, and other benefit-related costs; the impact of
economic, political, and other conditions on us, our customers,
suppliers, vendors, and lenders, including potential business
disruptions related to ongoing military conflicts taking place in
various parts of the world, most notably the Russia-Ukraine and
Israel-Hamas wars, other recent hostilities in the Middle East, and
militant attacks on cargo vessels in the Red Sea, civil and
political unrest, diplomatic tensions between the U.S. and other
countries, high interest rates, and bank failures, among other
factors described herein; the potential impact to our business
resulting from supply chain disruptions, including those caused by
capacity constraints, closed factories and/or labor shortages
(stemming from pandemic diseases, labor disputes, strikes, or
otherwise), scarcity of raw materials, port congestion, and
scrutiny or detention of goods produced in certain territories
resulting from laws, regulations, or trade restrictions, such as
those imposed by the Uyghur Forced Labor Prevention Act ("UFLPA")
or the Countering America's Adversaries Through Sanctions Act
("CAATSA"), which could result in shipment approval delays leading
to inventory shortages and lost sales, as well as potential
shipping delays, inventory shortages, and/or higher freight costs
resulting from port strikes, the recent Red Sea crisis, and/or
disruptions to major waterways such as the Suez and Panama canals;
uncertainty surrounding potential impacts of the 2024 U.S.
presidential and congressional elections on the economy, including
the potential for business disruptions resulting from any
subsequent protests, and the potential impact to consumer demand
and our business resulting from any significant changes in
legislation, policies, and regulations, including, but not limited
to, labor, taxation, monetary policies, and trade agreements; our
ability to effectively manage inventory levels and the increasing
pressure on our margins in a highly promotional retail environment;
our exposure to currency exchange rate fluctuations from both a
transactional and translational perspective; our ability to recruit
and retain qualified employees to operate our retail stores,
distribution centers, and various corporate functions; the impact
to our business resulting from a recession or changes in consumers'
ability, willingness, or preferences to purchase discretionary
items and luxury retail products, which tends to decline during
recessionary periods, and our ability to accurately forecast
consumer demand, the failure of which could result in either a
build-up or shortage of inventory; our ability to successfully
implement our long-term growth strategy; our ability to continue to
expand and grow our business internationally and the impact of
related changes in our customer, channel, and geographic sales mix
as a result, as well as our ability to accelerate growth in certain
product categories; our ability to open new retail stores and
concession shops, as well as enhance and expand our digital
footprint and capabilities, all in an effort to expand our
direct-to-consumer presence; our ability to respond to constantly
changing fashion and retail trends and consumer demands in a timely
manner, develop products that resonate with our existing customers
and attract new customers, and execute marketing and advertising
programs that appeal to consumers; our ability to competitively
price our products and create an acceptable value proposition for
consumers; our ability to continue to maintain our brand image and
reputation and protect our trademarks; our ability to achieve our
goals regarding citizenship and sustainability practices, including
those related to climate change, our human capital, and our supply
chain; our ability and the ability of our third-party service
providers to secure our respective facilities and systems from,
among other things, cybersecurity breaches, acts of vandalism,
computer viruses, ransomware, or similar Internet or email events;
our efforts to successfully enhance, upgrade, and/or transition our
global information technology systems and digital commerce
platforms; the potential impact to our business if any of our
distribution centers were to become inoperable or inaccessible; the
potential impact to our business resulting from pandemic diseases
such as COVID-19, including periods of reduced operating hours and
capacity limits and/or temporary closure of our stores,
distribution centers, and corporate facilities, as well as those of
our customers, suppliers, and vendors, and potential changes to
consumer behavior, spending levels, and/or shopping preferences,
such as willingness to congregate in shopping centers or other
populated locations; the potential impact on our operations and on
our suppliers and customers resulting from man-made or natural
disasters, including pandemic diseases, severe weather, geological
events, and other catastrophic events, such as terrorist attacks,
military conflicts, and other hostilities; our ability to achieve
anticipated operating enhancements and cost reductions from our
restructuring plans, as well as the impact to our business
resulting from restructuring-related charges, which may be dilutive
to our earnings in the short term; the impact to our business
resulting from potential costs and obligations related to the early
or temporary closure of our stores or termination of our long-term,
non-cancellable leases; our ability to maintain adequate levels of
liquidity to provide for our cash needs, including our debt
obligations, tax obligations, capital expenditures, and potential
payment of dividends and repurchases of our Class A common stock,
as well as the ability of our customers, suppliers, vendors, and
lenders to access sources of liquidity to provide for their own
cash needs; the potential impact to our business resulting from the
financial difficulties of certain of our large wholesale customers,
which may result in consolidations, liquidations, restructurings,
and other ownership changes in the retail industry, as well as
other changes in the competitive marketplace, including the
introduction of new products or pricing changes by our competitors;
our ability to access capital markets and maintain compliance with
covenants associated with our existing debt instruments; a variety
of legal, regulatory, tax, political, and economic risks, including
risks related to the importation and exportation of products which
our operations are currently subject to, or may become subject to
as a result of potential changes in legislation, and other risks
associated with our international operations, such as compliance
with the Foreign Corrupt Practices Act or violations of other
anti-bribery and corruption laws prohibiting improper payments, and
the burdens of complying with a variety of foreign laws and
regulations, including tax laws, trade and labor restrictions, and
related laws that may reduce the flexibility of our business; the
impact to our business resulting from the potential imposition of
additional duties, tariffs, taxes, and other charges or barriers to
trade, including those resulting from trade developments between
the U.S. and China or other countries, and any related impact to
global stock markets, as well as our ability to implement
mitigating sourcing strategies; changes in our tax obligations and
effective tax rate due to a variety of factors, including potential
changes in U.S. or foreign tax laws and regulations, accounting
rules, or the mix and level of earnings by jurisdiction in future
periods that are not currently known or anticipated; the potential
impact to the trading prices of our securities if our operating
results, Class A common stock share repurchase activity, and/or
cash dividend payments differ from investors' expectations; our
ability to maintain our credit profile and ratings within the
financial community; our intention to introduce new products or
brands, or enter into or renew alliances; changes in the business
of, and our relationships with, major wholesale customers and
licensing partners; our ability to make strategic acquisitions and
successfully integrate the acquired businesses into our existing
operations; and other risk factors identified in the Company’s
Annual Report on Form 10-K, Form 10-Q and Form 8-K reports filed
with the Securities and Exchange Commission. The Company undertakes
no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
RALPH LAUREN
CORPORATION
CONSOLIDATED BALANCE
SHEETS
Prepared in accordance with
U.S. Generally Accepted Accounting Principles
(Unaudited)
September 28,
2024
March 30, 2024
September 30,
2023
(millions)
ASSETS
Current assets:
Cash and cash equivalents
$
1,355.0
$
1,662.2
$
1,381.8
Short-term investments
334.7
121.0
85.1
Accounts receivable, net of allowances
517.9
446.5
461.1
Inventories
1,127.9
902.2
1,195.3
Income tax receivable
56.2
56.0
50.0
Prepaid expenses and other current
assets
212.9
171.9
221.2
Total current assets
3,604.6
3,359.8
3,394.5
Property and equipment, net
832.1
850.4
875.6
Operating lease right-of-use assets
1,013.9
1,014.6
1,088.2
Deferred tax assets
281.1
288.3
262.7
Goodwill
900.6
888.1
883.0
Intangible assets, net
69.3
75.7
82.2
Other non-current assets
98.4
125.7
136.9
Total assets
$
6,800.0
$
6,602.6
$
6,723.1
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt
$
399.3
$
—
$
—
Accounts payable
495.7
332.2
460.1
Current income tax payable
61.4
79.8
56.3
Current operating lease liabilities
240.3
245.5
270.9
Accrued expenses and other current
liabilities
895.7
809.7
823.1
Total current liabilities
2,092.4
1,467.2
1,610.4
Long-term debt
742.2
1,140.5
1,139.5
Long-term finance lease liabilities
246.0
256.1
266.9
Long-term operating lease liabilities
1,020.1
1,014.0
1,079.0
Non-current income tax payable
—
42.2
42.2
Non-current liability for unrecognized tax
benefits
132.7
118.7
100.7
Other non-current liabilities
124.3
113.6
115.2
Total liabilities
4,357.7
4,152.3
4,353.9
Equity:
Common stock
1.3
1.3
1.3
Additional paid-in-capital
2,983.8
2,923.8
2,875.0
Retained earnings
7,265.4
7,051.6
6,779.7
Treasury stock, Class A, at cost
(7,582.5
)
(7,250.3
)
(7,024.0
)
Accumulated other comprehensive loss
(225.7
)
(276.1
)
(262.8
)
Total equity
2,442.3
2,450.3
2,369.2
Total liabilities and equity
$
6,800.0
$
6,602.6
$
6,723.1
Net Cash & Short-term
Investments(a)
$
548.2
$
642.7
$
327.4
Cash & Short-term Investments
1,689.7
1,783.2
1,466.9
___________________ (a)
Calculated as cash and cash equivalents, plus short-term
investments, less total debt.
RALPH LAUREN
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
Prepared in accordance with
U.S. Generally Accepted Accounting Principles
(Unaudited)
Three Months Ended
Six Months Ended
September 28,
2024
September 30,
2023
September 28,
2024
September 30,
2023
(millions, except per share
data)
Net revenues
$
1,726.0
$
1,633.0
$
3,238.2
$
3,129.5
Cost of goods sold
(570.3
)
(562.9
)
(1,016.7
)
(1,027.4
)
Gross profit
1,155.7
1,070.1
2,221.5
2,102.1
Selling, general, and administrative
expenses
(958.4
)
(896.3
)
(1,808.3
)
(1,726.3
)
Restructuring and other charges, net
(18.4
)
(9.3
)
(25.8
)
(44.9
)
Total other operating expenses,
net
(976.8
)
(905.6
)
(1,834.1
)
(1,771.2
)
Operating income
178.9
164.5
387.4
330.9
Interest expense
(11.4
)
(10.0
)
(22.3
)
(20.0
)
Interest income
17.9
15.8
38.0
31.5
Other income (expense), net
2.7
(4.8
)
1.6
(6.3
)
Income before income taxes
188.1
165.5
404.7
336.1
Income tax provision
(40.2
)
(18.6
)
(88.2
)
(57.1
)
Net income
$
147.9
$
146.9
$
316.5
$
279.0
Net income per common share:
Basic
$
2.36
$
2.24
$
5.03
$
4.24
Diluted
$
2.31
$
2.19
$
4.93
$
4.15
Weighted-average common shares
outstanding:
Basic
62.6
65.6
62.9
65.7
Diluted
63.9
67.2
64.3
67.3
Dividends declared per share
$
0.825
$
0.75
$
1.65
$
1.50
RALPH LAUREN
CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
Prepared in accordance with
U.S. Generally Accepted Accounting Principles
(Unaudited)
Six Months Ended
September 28,
2024
September 30,
2023
(millions)
Cash flows from operating
activities:
Net income
$
316.5
$
279.0
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense
110.3
116.8
Deferred income tax expense
19.4
6.1
Stock-based compensation expense
60.0
50.7
Bad debt expense
2.1
0.3
Other non-cash charges (benefits)
(3.7
)
16.3
Changes in operating assets and
liabilities:
Accounts receivable
(63.4
)
(26.5
)
Inventories
(203.6
)
(151.0
)
Prepaid expenses and other current
assets
(40.4
)
(37.8
)
Accounts payable and accrued
liabilities
225.8
154.7
Income tax receivables and payables
(49.3
)
(41.8
)
Operating lease right-of-use assets and
liabilities, net
(0.5
)
(18.2
)
Other balance sheet changes
1.3
(5.0
)
Net cash provided by operating
activities
374.5
343.6
Cash flows from investing
activities:
Capital expenditures
(75.1
)
(82.4
)
Purchases of investments
(496.5
)
(158.6
)
Proceeds from sales and maturities of
investments
290.8
108.1
Other investing activities
1.0
—
Net cash used in investing
activities
(279.8
)
(132.9
)
Cash flows from financing
activities:
Payments of finance lease obligations
(10.8
)
(11.2
)
Payments of dividends
(98.9
)
(98.2
)
Repurchases of common stock, including
shares surrendered for tax withholdings
(330.2
)
(225.7
)
Net cash used in financing
activities
(439.9
)
(335.1
)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
36.8
(23.9
)
Net decrease in cash, cash equivalents,
and restricted cash
(308.4
)
(148.3
)
Cash, cash equivalents, and restricted
cash at beginning of period
1,670.6
1,536.9
Cash, cash equivalents, and restricted
cash at end of period
$
1,362.2
$
1,388.6
RALPH LAUREN
CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended
Six Months Ended
September 28,
2024
September 30,
2023
September 28,
2024
September 30,
2023
(millions)
Net revenues:
North America
$
739.5
$
717.8
$
1,347.7
$
1,349.5
Europe
565.9
526.8
1,045.0
977.3
Asia
380.2
348.4
771.1
725.9
Other non-reportable segments
40.4
40.0
74.4
76.8
Total net revenues
$
1,726.0
$
1,633.0
$
3,238.2
$
3,129.5
Operating income:
North America
$
121.9
$
110.2
$
241.7
$
235.5
Europe
145.9
132.4
266.5
229.6
Asia
86.3
68.4
193.5
161.7
Other non-reportable segments
33.5
34.1
63.1
67.9
387.6
345.1
764.8
694.7
Unallocated corporate expenses
(190.3
)
(171.3
)
(351.6
)
(318.9
)
Unallocated restructuring and other
charges, net
(18.4
)
(9.3
)
(25.8
)
(44.9
)
Total operating income
$
178.9
$
164.5
$
387.4
$
330.9
RALPH LAUREN
CORPORATION
CONSTANT CURRENCY FINANCIAL
MEASURES
(Unaudited)
Comparable Store Sales Data
September 28, 2024
Three Months Ended
Six Months Ended
% Change
% Change
Constant Currency
Constant Currency
North America:
Digital commerce
(2
%)
(3
%)
Brick and mortar
9
%
6
%
Total North America
6
%
4
%
Europe:
Digital commerce
14
%
14
%
Brick and mortar
15
%
11
%
Total Europe
15
%
12
%
Asia:
Digital commerce
19
%
20
%
Brick and mortar
10
%
9
%
Total Asia
11
%
10
%
Total Ralph Lauren Corporation
10
%
7
%
Operating Segment Net Revenues
Data
Three Months Ended
% Change
September 28,
2024
September 30,
2023
As
Reported
Constant
Currency
North America
$
739.5
$
717.8
3.0
%
3.1
%
Europe
565.9
526.8
7.4
%
6.3
%
Asia
380.2
348.4
9.1
%
10.4
%
Other non-reportable segments
40.4
40.0
0.9
%
0.9
%
Net revenues
$
1,726.0
$
1,633.0
5.7
%
5.6
%
Six Months Ended
% Change
September 28,
2024
September 30,
2023
As
Reported
Constant
Currency
North America
$
1,347.7
$
1,349.5
(0.1
%)
(0.1
%)
Europe
1,045.0
977.3
6.9
%
6.7
%
Asia
771.1
725.9
6.2
%
9.9
%
Other non-reportable segments
74.4
76.8
(3.1
%)
(3.1
%)
Net revenues
$
3,238.2
$
3,129.5
3.5
%
4.3
%
RALPH LAUREN
CORPORATION
NET REVENUES BY SALES
CHANNEL
(Unaudited)
Three Months Ended
September 28, 2024
September 30, 2023
North
America
Europe
Asia
Other
Total
North
America
Europe
Asia
Other
Total
(millions)
Sales Channel:
Retail
$
467.3
$
272.9
$
356.2
$
—
$
1,096.4
$
437.8
$
238.4
$
318.1
$
—
$
994.3
Wholesale
272.2
293.0
24.0
—
589.2
280.0
288.4
30.3
—
598.7
Licensing
—
—
—
40.4
40.4
—
—
—
40.0
40.0
Net revenues
$
739.5
$
565.9
$
380.2
$
40.4
$
1,726.0
$
717.8
$
526.8
$
348.4
$
40.0
$
1,633.0
Six Months Ended
September 28, 2024
September 30, 2023
North
America
Europe
Asia
Other
Total
North
America
Europe
Asia
Other
Total
(millions)
Sales Channel:
Retail
$
884.0
$
518.0
$
727.0
$
—
$
2,129.0
$
848.8
$
465.1
$
670.2
$
—
$
1,984.1
Wholesale
463.7
527.0
44.1
—
1,034.8
500.7
512.2
55.7
—
1,068.6
Licensing
—
—
—
74.4
74.4
—
—
—
76.8
76.8
Net revenues
$
1,347.7
$
1,045.0
$
771.1
$
74.4
$
3,238.2
$
1,349.5
$
977.3
$
725.9
$
76.8
$
3,129.5
RALPH LAUREN
CORPORATION
GLOBAL RETAIL STORE
NETWORK
(Unaudited)
September 28,
2024
September 30,
2023
North
America
Ralph Lauren Stores
50
49
Outlet Stores
178
187
Total Directly Operated Stores
228
236
Concessions
1
1
Europe
Ralph Lauren Stores
44
44
Outlet Stores
60
60
Total Directly Operated Stores
104
104
Concessions
27
27
Asia
Ralph Lauren Stores
144
128
Outlet Stores
94
96
Total Directly Operated Stores
238
224
Concessions
654
682
Global Directly
Operated Stores and Concessions
Ralph Lauren Stores
238
221
Outlet Stores
332
343
Total Directly Operated Stores
570
564
Concessions
682
710
Global Licensed
Partner Stores
Total Licensed Partner Stores
106
99
RALPH LAUREN
CORPORATION
RECONCILIATION OF NON-U.S.
GAAP FINANCIAL MEASURES
(Unaudited)
Three Months Ended
September 28, 2024
As
Reported
Total
Adjustments(a)(b)
As
Adjusted
(Reported $)
Foreign
Currency
Impact
As
Adjusted
(Constant $)
(millions, except per share
data)
Net revenues
$
1,726.0
$
—
$
1,726.0
$
(0.8
)
$
1,725.2
Gross profit
1,155.7
—
1,155.7
2.3
1,158.0
Gross profit margin
67.0
%
67.0
%
67.1
%
Total other operating expenses, net
(976.8
)
18.4
(958.4
)
1.5
(956.9
)
(f)
Operating expense margin
56.6
%
55.5
%
55.5
%
Operating income
178.9
18.4
197.3
3.8
201.1
Operating margin
10.4
%
11.4
%
11.7
%
Income before income taxes
188.1
18.4
206.5
Income tax provision
(40.2
)
(4.2
)
(44.4
)
Effective tax rate
21.4
%
21.5
%
Net income
$
147.9
$
14.2
$
162.1
Net income per diluted common share
$
2.31
$
2.54
SEGMENT
INFORMATION
REVENUE:
North America
$
739.5
$
—
$
739.5
$
0.4
$
739.9
Europe
565.9
—
565.9
(5.7
)
560.2
Asia
380.2
—
380.2
4.5
384.7
Other non-reportable segments
40.4
—
40.4
—
40.4
Total revenue
$
1,726.0
$
—
$
1,726.0
$
(0.8
)
$
1,725.2
OPERATING INCOME:
North America
$
121.9
$
—
$
121.9
Operating margin
16.5
%
16.5
%
Europe
145.9
—
145.9
Operating margin
25.8
%
25.8
%
Asia
86.3
—
86.3
Operating margin
22.7
%
22.7
%
Other non-reportable segments
33.5
—
33.5
Operating margin
82.9
%
82.9
%
Unallocated corporate expenses and
restructuring & other charges, net
(208.7
)
18.4
(190.3
)
Total operating income
$
178.9
$
18.4
$
197.3
RALPH LAUREN
CORPORATION
RECONCILIATION OF NON-U.S.
GAAP FINANCIAL MEASURES (Continued)
(Unaudited)
Six Months Ended
September 28, 2024
As
Reported
Total
Adjustments(a)(c)
As
Adjusted
(Reported $)
Foreign
Currency
Impact
As
Adjusted
(Constant $)
(millions, except per share
data)
Net revenues
$
3,238.2
$
—
$
3,238.2
$
25.3
$
3,263.5
Gross profit
2,221.5
—
2,221.5
27.1
2,248.6
Gross profit margin
68.6
%
68.6
%
68.9
%
Total other operating expenses, net
(1,834.1
)
25.8
(1,808.3
)
(12.3
)
(1,820.6
)
Operating expense margin
56.6
%
55.8
%
55.8
%
Operating income
387.4
25.8
413.2
14.8
428.0
Operating margin
12.0
%
12.8
%
13.1
%
Income before income taxes
404.7
25.8
430.5
Income tax provision
(88.2
)
(5.6
)
(93.8
)
Effective tax rate
21.8
%
21.8
%
Net income
$
316.5
$
20.2
$
336.7
Net income per diluted common share
$
4.93
$
5.24
SEGMENT
INFORMATION
REVENUE:
North America
$
1,347.7
$
—
$
1,347.7
$
0.9
$
1,348.6
Europe
1,045.0
—
1,045.0
(2.0
)
1,043.0
Asia
771.1
—
771.1
26.4
797.5
Other non-reportable segments
74.4
—
74.4
—
74.4
Total revenue
$
3,238.2
$
—
$
3,238.2
$
25.3
$
3,263.5
OPERATING INCOME:
North America
$
241.7
$
—
$
241.7
Operating margin
17.9
%
17.9
%
Europe
266.5
—
266.5
Operating margin
25.5
%
25.5
%
Asia
193.5
—
193.5
Operating margin
25.1
%
25.1
%
Other non-reportable segments
63.1
—
63.1
Operating margin
84.8
%
84.8
%
Unallocated corporate expenses and
restructuring & other charges, net
(377.4
)
25.8
(351.6
)
Total operating income
$
387.4
$
25.8
$
413.2
RALPH LAUREN
CORPORATION
RECONCILIATION OF NON-U.S.
GAAP FINANCIAL MEASURES (Continued)
(Unaudited)
Three Months Ended
September 30, 2023
As
Reported
Total
Adjustments(a)(d)
As
Adjusted
(millions, except per share
data)
Net revenues
$
1,633.0
$
—
$
1,633.0
Gross profit
1,070.1
(1.8
)
1,068.3
Gross profit margin
65.5
%
65.4
%
Total other operating expenses, net
(905.6
)
9.0
(896.6
)
(g)
Operating expense margin
55.5
%
54.9
%
Operating income
164.5
7.2
171.7
Operating margin
10.1
%
10.5
%
Income before income taxes
165.5
7.2
172.7
Income tax provision
(18.6
)
(13.2
)
(31.8
)
Effective tax rate
11.2
%
18.5
%
Net income
$
146.9
$
(6.0
)
$
140.9
Net income per diluted common share
$
2.19
$
2.10
SEGMENT
INFORMATION
OPERATING INCOME:
North America
$
110.2
$
(2.1
)
$
108.1
Operating margin
15.4
%
15.1
%
Europe
132.4
—
132.4
Operating margin
25.1
%
25.1
%
Asia
68.4
—
68.4
Operating margin
19.6
%
19.6
%
Other non-reportable segments
34.1
—
34.1
Operating margin
85.2
%
85.2
%
Unallocated corporate expenses and
restructuring & other charges, net
(180.6
)
9.3
(171.3
)
Total operating income
$
164.5
$
7.2
$
171.7
RALPH LAUREN
CORPORATION
RECONCILIATION OF NON-U.S.
GAAP FINANCIAL MEASURES (Continued)
(Unaudited)
Six Months Ended
September 30, 2023
As
Reported
Total
Adjustments(a)(e)
As
Adjusted
(millions, except per share
data)
Net revenues
$
3,129.5
$
—
$
3,129.5
Gross profit
2,102.1
(3.6
)
2,098.5
Gross profit margin
67.2
%
67.1
%
Total other operating expenses, net
(1,771.2
)
44.5
(1,726.7
)
Operating expense margin
56.6
%
55.2
%
Operating income
330.9
40.9
371.8
Operating margin
10.6
%
11.9
%
Income before income taxes
336.1
40.9
377.0
Income tax provision
(57.1
)
(21.0
)
(78.1
)
Effective tax rate
17.0
%
20.7
%
Net income
$
279.0
$
19.9
$
298.9
Net income per diluted common share
$
4.15
$
4.44
SEGMENT
INFORMATION
OPERATING INCOME:
North America
$
235.5
$
(3.8
)
$
231.7
Operating margin
17.4
%
17.2
%
Europe
229.6
(0.2
)
229.4
Operating margin
23.5
%
23.5
%
Asia
161.7
—
161.7
Operating margin
22.3
%
22.3
%
Other non-reportable segments
67.9
—
67.9
Operating margin
88.4
%
88.4
%
Unallocated corporate expenses and
restructuring & other charges, net
(363.8
)
44.9
(318.9
)
Total operating income
$
330.9
$
40.9
$
371.8
RALPH LAUREN
CORPORATION
FOOTNOTES TO RECONCILIATION OF
NON-U.S. GAAP FINANCIAL MEASURES
(a)
Adjustments for non-routine
inventory-related charges (benefits) are recorded within cost of
goods sold in the consolidated statements of operations.
Adjustments for non-routine bad debt expense (benefit) are recorded
within selling, general, and administrative ("SG&A") expenses
in the consolidated statements of operations. Adjustments for
one-time income tax events are recorded within the income tax
benefit (provision) in the consolidated statements of operations.
Adjustments for all other charges are recorded within restructuring
and other charges, net in the consolidated statements of
operations.
(b)
Adjustments for the three months ended
September 28, 2024 include (i) charges of $9.0 million recorded in
connection with the Company's restructuring activities, primarily
associated with severance and benefit costs; (ii) other charges of
$5.7 million in connection with the Company's Next Generation
Transformation project; (iii) other charges of $4.1 million
primarily related to rent and occupancy costs associated with
certain previously exited real estate locations in connection with
the Company's restructuring activities for which the related lease
agreements have not yet expired; and (iv) income of $0.4 million
related to consideration received from Regent, L.P. in connection
with the Company's previously sold Club Monaco business.
(c)
Adjustments for the six months ended
September 28, 2024 include (i) charges of $12.3 million recorded in
connection with the Company's restructuring activities, primarily
associated with severance and benefit costs; (ii) other charges of
$8.0 million in connection with the Company's Next Generation
Transformation project; (iii) other charges of $6.9 million
primarily related to rent and occupancy costs associated with
certain previously exited real estate locations in connection with
the Company's restructuring activities for which the related lease
agreements have not yet expired; and (iv) income of $1.4 million
related to consideration received from Regent, L.P. in connection
with the Company's previously sold Club Monaco business.
(d)
Adjustments for the three months ended
September 30, 2023 include (i) charges of $6.8 million recorded in
connection with the Company's restructuring activities, primarily
associated with severance and benefit costs; (ii) other charges of
$4.5 million primarily related to rent and occupancy costs
associated with certain previously exited real estate locations in
connection with the Company's restructuring activities for which
the related lease agreements have not yet expired; (iii) income of
$2.0 million related to consideration received from Regent, L.P. in
connection with the Company's previously sold Club Monaco business;
(iv) non-routine inventory benefits of $1.8 million primarily
related to reversals of amounts previously recognized in connection
with delays in U.S. customs shipment reviews and approvals; and (v)
benefit of $0.3 million primarily related to Russia-related bad
debt reserve adjustments. Additionally, the income tax provision
reflects a benefit of $11.8 million recorded in connection with
Swiss tax reform and the European Union's anti-tax avoidance
directive.
(e)
Adjustments for the six months ended
September 30, 2023 include (i) charges of $37.3 million recorded in
connection with the Company's restructuring activities, primarily
associated with severance and benefit costs; (ii) other charges of
$9.6 million primarily related to rent and occupancy costs
associated with certain previously exited real estate locations in
connection with the Company's restructuring activities for which
the related lease agreements have not yet expired; (iii)
non-routine inventory benefits of $3.6 million primarily related to
reversals of amounts previously recognized in connection with
delays in U.S. customs shipment reviews and approvals and the
COVID-19 pandemic; (iv) income of $2.0 million related to
consideration received from Regent, L.P. in connection with the
Company's previously sold the Club Monaco business; and (v) benefit
of $0.4 million primarily related to Russia-related bad debt
reserve adjustments. Additionally, the income tax provision
reflects a benefit of $11.8 million recorded in connection with
Swiss tax reform and the European Union's anti-tax avoidance
directive.
(f)
Total adjusted other operating expenses,
net excluding marketing and advertising ("Marketing") expenses for
the three months ended September 28, 2024 were as follows:
Three Months Ended
September 28, 2024
As Adjusted
in Constant $
(incl. Marketing)
Marketing Expenses
As Adjusted
in Constant $
(excl. Marketing)
(millions)
Total other operating expenses, net
$
(956.9
)
$
150.2
$
(806.7
)
Operating expense margin
55.5
%
46.8
%
(g) Total adjusted other operating expenses, net
excluding Marketing expenses for the three months ended September
30, 2023 were as follows:
Three Months Ended
September 30, 2023
As
Adjusted
(incl. Marketing)
Marketing Expenses
As
Adjusted
(excl. Marketing)
(millions)
Total other operating expenses, net
$
(896.6
)
$
133.1
$
(763.5
)
Operating expense margin
54.9
%
46.8
%
NON-U.S. GAAP FINANCIAL MEASURES
Because Ralph Lauren Corporation is a global company, the
comparability of its operating results reported in U.S. Dollars is
affected by foreign currency exchange rate fluctuations because the
underlying currencies in which it transacts change in value over
time compared to the U.S. Dollar. Such fluctuations can have a
significant effect on the Company's reported results. As such, in
addition to financial measures prepared in accordance with
accounting principles generally accepted in the U.S. ("U.S. GAAP"),
the Company's discussions often contain references to constant
currency measures, which are calculated by translating current-year
and prior-year reported amounts into comparable amounts using a
single foreign exchange rate for each currency. The Company
presents constant currency financial information, which is a
non-U.S. GAAP financial measure, as a supplement to its reported
operating results. The Company uses constant currency information
to provide a framework for assessing how its businesses performed
excluding the effects of foreign currency exchange rate
fluctuations. Management believes this information is useful to
investors for facilitating comparisons of operating results and
better identifying trends in the Company's businesses. The constant
currency performance measures should be viewed in addition to, and
not in lieu of or superior to, the Company's operating performance
measures calculated in accordance with U.S. GAAP.
This earnings release also includes certain other non-U.S. GAAP
financial measures relating to the impact of charges and other
items as described herein. The Company uses non-U.S. GAAP financial
measures, among other things, to evaluate its operating performance
and to better represent the manner in which it conducts and views
its business. The Company believes that excluding items that are
not comparable from period to period helps investors and others
compare operating performance between two periods. While the
Company considers non-U.S. GAAP measures useful in analyzing its
results, they are not intended to replace, nor act as a substitute
for, any presentation included in the consolidated financial
statements prepared in conformity with U.S. GAAP, and may be
different from non-U.S. GAAP measures reported by other
companies.
Adjustments made during the fiscal periods presented include
charges recorded in connection with the Company's restructuring
activities, as well as certain other charges (benefits) associated
with other non-recurring events, as described in the footnotes to
the non-U.S. GAAP financial measures above. The income tax benefit
(provision) has been adjusted for the tax-related effects of these
charges, which were calculated using the respective statutory tax
rates for each applicable jurisdiction. The income tax benefit
(provision) has also been adjusted for certain other one-time
income tax events and other adjustments, as described in the
footnotes to the non-U.S. GAAP financial measures above. Included
in this earnings release are reconciliations between the non-U.S.
GAAP financial measures and the most directly comparable U.S. GAAP
measures before and after these adjustments.
Additionally, the Company's full year Fiscal 2025 and third
quarter guidance excludes any potential restructuring-related and
other charges that may be incurred in future periods. The Company
is not able to provide a full reconciliation of these non-U.S. GAAP
financial measures to U.S. GAAP as it is not known at this time if
and when any such charges may be incurred in the future.
Accordingly, a reconciliation of the Company's non-U.S. GAAP based
financial measure guidance to the most directly comparable U.S.
GAAP measures cannot be provided at this time given the uncertain
nature of any such potential charges that may be incurred in future
periods.
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version on businesswire.com: https://www.businesswire.com/news/home/20241106117975/en/
Investor Relations: Corinna Van der Ghinst ir@ralphlauren.com Or
Corporate Communications rl-press@ralphlauren.com
Ralph Lauren (NYSE:RL)
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